Zions Direct has added a new feature to its auction platform that could make a big difference for auction participants. Bidders can now elect to place Non-Competitive Bids in auctions for FDIC-insured CDs, or investment securities. Auction participants are able to lock in their desired number of units, let the auction process take its course and still receive the final auction yield-similar to the process used in US Treasury auctions.
When participating in the auction, bidders will see a new column on the bid page with a Non-Competitive Bid box they can check to indicate they would like to buy the units regardless of the final yield. A prompt will ask the bidder to confirm that they are placing a bid for the lowest yield and/or the highest price. This is not necessarily the yield the bidder will receive; this just insures the bidder will receive his/her units at the minimum yield or better.
This function allows bidders who know they want a particular security regardless of the final market-clearing yield to ensure their place in an auction. This will work as long as the auction hasnt completely filled at the lowest possible yield when the noncompetitive bid is placed.
For example, if a bidder would like to buy a CD in a Charity Auction and the bidder feels comfortable with the purchase at the lowest yield for that particular CD, he or she can enter the auction by placing a non-competitive bid. This bidder then relies on other auction participants to determine the final market-clearing yield, just like in US Treasury auctions. The non-competitive bidder receives the CDs they wanted and the bidders designated charity will have a donation directed to them from Zions Bank.
The Non-Competitive Bid is just one more way Zions Direct is making it even easier for retail bidders to participate in our auctions and find the CDs or investment securities that best fit their needs.
Starlee Basinger is an employee of Zions Bank. Zions Direct is a wholly owned non-bank subsidiary of Zions Bank.
Investment products and services offered through Zions Direct, member of FINRA/SIPC.
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